What is an Autonomous Expenditure?

Autonomous expenditure simply refers to spending that must be done, regardless of income. It is the minimum spending by an individual or the government when income is at level zero.

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Why is Autonomous Expenditure Important?

An Autonomous expenditure by an individual or government refers to spending in an economy that is mandatory. The real level of income of an individual or a country does not affect autonomous expenditure. According to classical economic theory, autonomous spending affects the aggregate output of an economy. As such, the rise or decline in autonomous spending will translate to the same in the aggregate output.

A change in the level of income, whether positive or negative, does not cause a change in autonomous expenditure. For instance, autonomous expenditure for an individual could be food purchase, house costs, payment of utility bills and others. The amount of income directed towards autonomous expenditures might be adjusted when there is a decline in the level of income, they still remain mandatory spending. For instance, individuals might reduce or change their food habits, live in smaller apartments, cut off some utilities among others, but these expenditures are ever-present. So, even when changes in income level affect how the expenses are met, the needs remain unchanged. For the government, autonomous expenditure is associated with self-governance and the ability to meet basic needs. For instance, humans cannot do without food or shelter. This is important to their ability to live and is therefore autonomous. Expenditure that is not necessary or mandatory is regarded as non-essential and can be categorized as discretionary spending or a discretionary expenditure. Autonomous Expenditure and autonomous consumption go hand in hand, as the latter concerns what is mandatory or absolutely necessary amount of consumption by and individual or people. They are needs that are not affected by the level of income. The majority of government spending is considered to be mandatory or autonomous spending. Such as the provision of basic amenities and infrastructure, good health care, road networks, and others. Autonomous expenditure for the government has a strong connection with its autonomy, it goes a long way in determining how well a country is able to meet its basic needs. 

Related Topics

• What is Government Spending?
• Autonomous Spending
• Autonomous Consumption
• Fiscal Policy
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• Contractionary Fiscal Policy
• Progressive vs Regressive Tax
• Marginal Tax Rates
• Proportional Tax
• Trickle Down Theory
• Discretionary Fiscal Policy
• Automatic Stabilizers
• Effects of Discretionary Policy (Interest Rates & Lags)
• Crowding Out Effect 
• National Debt
• Government Borrowing
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• Ricardian Equivalence
• Balanced Budget - Deficit and Surplus
• National Debt
• Standardized Employment Budget
• Deficit Hawk
• Austerity
• Twin Deficits
• Fiscal Policy and the Aggregate Supply and Demand Curve
• Stabilization Policy
• Robin Hood Effect
• Ricardo Barro Effect
• Automatic Stabilizers
• Standardized Employment Budget
• How Does Fiscal Policy Affect Interest Rates? 
• Crowding Out
• Types of Lag in Fiscal Policy
• Temporary and Permanent Fiscal Policy
• Limitations of Fiscal Policy?
• How Politics Affects Discretionary Fiscal Policy
• Government Borrowing
• National Savings and Investment Identity
• Debtor Nation
• Fiscal Policy Affects Trade Balances
• Twin Deficits
• Exchange Rates Affect Budget and Trade Deficits
• What are the risks of chronic large deficits in the United States?
• How Fiscal Policy Can Affect Trade Imbalances
• Government Borrowing Affect Private Savings
• Ricardian Equivalence
• Fiscal Policy Affects Investment and Economic Growth
• Crowding Out of Physical Capital Investment?
• How Does Government Borrowing Affect Interest Rates in Financial Markets?
• Government Investment in Physical Capital
• Public Investment in Human Capital
• Fiscal Policy Can Affect Technology Development

• Economic Cycle or Business Cycle
• Business Cycle Indicator
• Peak and Trough
• Recession and Depression
• Hard Landing vs Soft Landing
• Economic Bubble
• Boom and Bust Cycle
• Great Depression
• Baby Boomer Age Wave Theory

• Skyscrapper Effect (Economics)
• V-Shaped Recovery
• W-Shaped Recovery
• U-Shaped Recovery
• Kondratieff Wave Cycle
• Contagion
• Feedback Rule Policy
• American Customer Satisfaction Index
• CNN Effect
• Bureau of Economic Analysis
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• American Recover and Reinvestment Act
• Abenomics
• Emergency Economic Stabilization Act of 2008
• Commodity Credit Corporation
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• Real Economic Growth Rate
• Fox-Trot Economy

• Stagnation
• Neoclassical Growth Theory
• Exogenous Growth Theory
• Endogenous Growth Theory
• New Growth Theory - Explained
• Classical Growth Theory - Explained
• Real Economic Growth Rate - Explained
• Plutonomy